WASHINGTON — A Congressional Review Act (CRA) resolution has been filed over the Biden administration’s new labor rule that aims to prevent the misclassification of workers as “independent contractors.”
The rule is scheduled to go into effect March 11.
On Wednesday, Rep. Kevin Kiley, R-Calif., and Sen. Bill Cassidy, R-La., introduced the CRA joint resolution of disapproval.
The CRA provides Congress with special procedures, in the form of a joint resolution of disapproval, under which to consider legislation to overturn rules.
The American Trucking Associations is among national transportation organizations speaking out in favor of the CRA.
“More than 350,000 truckers choose to work as independent contractors because of the economic opportunity it creates and the flexibility it provides, enabling them to run their own business and choose their own hours and routes,” said ATA President and CEO Chris Spear. “The Biden administration’s IC (independent contractor) rule eliminates this freedom and intentionally undermines the livelihoods of truckers and their families across the country by replacing a clear, straight-forward standard with a tangled mess that will weaken our supply chain.”
The trucking industry has relied on independent contractors since the inception of interstate trucking, and court decisions over the last nine decades have continually reaffirmed the legitimate role independent contractors play in the economy, Spear said.
“That freedom of choice has been an enormous source of empowerment for women, minorities and immigrants pursuing the American Dream,” he noted.
In 2021, the Department of Labor issued a rule supported by ATA clarifying the definition of employee under the Fair Labor Standards Act as it relates to independent contractors.
The department’s new rule, which ATA has sharply criticized, replaces the 2021 standard with an opaque and deliberately confusing standard designed to fuel frivolous litigation and deny self-employed individuals the freedom of choice to work as independent contractors. This week, ATA joined a broad coalition of organizations in filing a lawsuit challenging the rule.
“The rule was crafted under the leadership of Acting Secretary of Labor Julie Su, who has repeatedly failed to recognize the importance of independent contractors and implemented California’s disastrous AB5 as the head of the state’s labor and workforce development agency,” Spear said. “The ATA remains staunchly opposed to Su’s nomination to serve as secretary of labor.”
Spear said that “Had Julie Su actually spoken with drivers — not just big labor bosses — she would know this firsthand. The ATA stands firmly behind Representative Kiley and Senator Cassidy’s effort to defeat this ill-advised rule, and we will continue to work alongside them and other Members of Congress to protect Americans’ right to earn a living in the way that they choose.”
The Labor Department rule, which the administration proposed 15 months ago, replaces a Trump-era standard that narrowed the criteria for classifying employees as contractors. Such workers are not guaranteed minimum wages or benefits, such as health coverage and paid sick days.
Labor advocates have supported the rule, saying employers have exploited lax rules to misclassify workers and avoid properly compensating them. In a report, the left-leaning Economic Policy Institute said construction workers, truck drivers, cleaners, landscapers, security guards and call center workers are among the most commonly misclassified workers. It estimated that misclassified construction workers lose between $10,177 and $16,729 per year.
The rule directs employers to consider six criteria for determining whether a worker is an employee or a contractor, without predetermining whether one outweighs the other. That’s a change from the Trump-era rule, which prioritized two criteria: how much control a company has over its workers and how much “entrepreneurial opportunity” the work provides.
Advocates say the new rule offers a more comprehensive approach to determining whether workers are truly in business for themselves. In a briefing with reporters earlier this year, Su said misclassified workers “sometimes work side by side with individuals who are properly classified, doing the same work.”
“But misclassified employees don’t get paid for all of their hours,” Su said. “They’ve seen their economic security eroded because of misclassification.”
Jessica Looman, administrator of the Department of Labor’s Wage and Hour Division, said that the final rule isn’t intended to apply specifically to certain industries or type of work. Asked about enforcement, Looman said the department will focus on the “most vulnerable workers,” particularly those who are being unfairly deprived of minimum wages and overtime pay.
The rule does not carry the same weight as laws passed by Congress or state legislatures. Instead, it offers an interpretation of who should qualify for protections under the 1938 Fair Labor Standards Act.
Financial markets appeared to shrug off news of the new rule Tuesday. Shares of Uber gained 2.2%, while Lyft slipped about 0.5%. When the administration unveiled the proposed rules in October 2022, they dropped 10% and 12% respectively.
Like the ATA, the Intermodal Association of North America (IANA) expressed its support for the CRA resolution, saying in a news release that it threatens the livelihood of millions of independent contractors, including the vast majority of intermodal truck drivers, who could be involuntarily reclassified as employees.
“The intermodal industry serves as an important pillar of our nation’s economy, ensuring the safe and efficient transportation of cargo, ranging from industrial materials and agricultural products to consumer goods,” said IANA President and CEO Joni Casey. “For decades, more than 80% of intermodal drivers have chosen to carry out this important work as independent contractors. DOL’s recent rulemaking threatens to eliminate their freedom of choice and the opportunity to invest in and operate their own businesses. Without Congressional action, the DOL’s new regulations will negatively impact the nation’s supply chain by deterring qualified drivers from the industry and worsening existing driver shortages, which will ultimately slow the movement of goods and increase costs for consumers.”
Born in Pine Bluff, Arkansas, and raised in East Texas, John Worthen returned to his home state to attend college in 1998 and decided to make his life in The Natural State. Worthen is a 20-year veteran of the journalism industry and has covered just about every topic there is. He has a passion for writing and telling stories. He has worked as a beat reporter and bureau chief for a statewide newspaper and as managing editor of a regional newspaper in Arkansas. Additionally, Worthen has been a prolific freelance journalist for two decades, and has been published in several travel magazines and on travel websites.
